"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green

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This book is the career memoir of a former Marine and stock broker who entered the “non-State Department” clandestine service of the CIA and was a deep cover case officer from the ’90s through the late ’00s. It covers the story of his training, deployment, and activities overseas focusing on radiological and biological weapons of mass destruction (WMD) in the course of tours in the Middle East, Eastern Europe, Russia, and finally a “combat tour” in Iraq. Serving overseas with his wife and children under the cover of a “software solutions expert,” he contacted disaffected or bribe-able scientists and business-people from rogue nations. By casting his inquiries as commercial and academic opportunities, he was able to gather a steady stream of intelligence on WMD programs in the Third World.

The central theme of the book, however, is how staff at the home office (from top to bottom) either intentionally or inadvertently got in the way of his doing an effective job. Most authors are the hero of their memoirs but Jones does an admirable job of giving his pride in his accomplishments a reasonable airing without masking the real value of his book. The CIA is a large modern business with a primary mandate to stay out of the newspapers and off TV. How it does so is a tale both depressing and all too familiar.

Without fanfare, the United Nations this week elected Iran to its Commission on the Status of Women, handing a four-year seat on the influential human rights body to a theocratic state in which stoning is enshrined in law and lashings are required for women judged “immodest.” (more here)

“Not surprising,” because this is the kind of thing that we have come to expect from the UN.

Bioengineers Turn Trees into Tires
Billions of gallons of oil are used worldwide every year to manufacture tires. Bioengineers are developing a plant-based substitute that could replace some of that oil within five years.

Hmmm, aren’t rubber trees, well, trees? I think it humorous that we started out making tires from trees but then so successfully and overwhelmingly switched to synthetic rubber that we now find the idea of making rubber from plant materials exciting and revolutionary.

This article demonstrates several different important facets of the policy debates about the environment and natural resources. For one thing, it reminds us that Reagan was right and the leftists wrong when he said that pollution comes mainly from trees. (Back in the ’80s, the EPA passed sweeping restrictions on isoprene and other compounds because of their role in generating smog. Reagan pointed out the inconvenient truth that 80% of the isoprene in the air over cities came from emissions from trees.)

The major thing it reminds us of, however, is that a major flaw exists in our debates over how we obtain and use natural resources.

The major flaw? It’s simple. There is no such thing as “natural” resources. When we debate over how to manage our “natural” resources, we’re engaging in a debate as delusional as heated arguments over the management of our unicorn ranches.

Even worse, its like using our delusion about unicorns as a pretext to kill people.

About 3 weeks ago, I wrote about Senator Christopher Dodd’s proposals for increased regulation of venture capital and angel investing and why these are very bad and damaging ideas. WSJ (4/22) makes several points about this proposed legislation:

Amazon, Yahoo, Google and Facebook all benefited from angel investors, who typically target companies under five years old…such firms are less than 1% of all companies yet generate about 10% of new jobs. Between 1980 and 2005, companies less than five years old accounted for all net job growth in the U.S. In 2008, angels invested some $19 billion in more than 55,000 companies.

Mr. Dodd’s bill would change all this for the worse. Most preposterously, it would require that start-ups seeking angel investments file with the Securities and Exchange Commission and endure a 120-day review. Rare is the new company that doesn’t need immediate access to the capital it raises, and a four-month delay is the kind of rule popular in banana republics that create few new businesses.

There’s a lot wrong with Dodd’s ideas on VC and angel investing; see my earlier post and the WSJ article for more details. There’s plenty more to be concerned about in the current approaches to financial regulation being devised on Capitol Hill.Read the rest of this entry »

The clueless Bloomberg reporterette interviewing Goldman Sachs chairman Lloyd Blankfein was like one of those MSM reporters who do man-on-the-street interviews in totalitarian countries: “So, Mr. Garcia, what do you think of President Castro’s new program?” Of course Blankfein gave vague answers and was careful to cite approvingly the great knowledge and wisdom of his Congressional masters. What did anyone expect him to say?

Meanwhile, Senator Levin thinks that a firm such as Goldman that is engaged in the business of making markets is doing something immoral because it is “betting against its customers”. This makes Senator Levin a fool or a demagogue or both. Maybe he will now try to ban all trade, since the fact that each party to a voluntary transaction thinks it is getting the better part of the deal must mean someone is getting ripped off.

As someone else said around here, the country is in the very best of hands.

Posted by Mitch Townsend on 27th April 2010 (All posts by Mitch Townsend)

The president of Mexico, Felipe Calderon, does not like the immigration law recently enacted in Arizona. He thinks it “doesn’t adequately guarantee respect for people’s fundamental rights.” Whether there exists a right to enter and remain in a foreign country without permission is certainly a proposition open to debate, and not often said to exist in other circumstances.

The US border has long served as a safety valve for Mexico. When there are no jobs available there, unemployed Mexicans have often come north for better prospects. Not only does this situation permit Mexicans to make their living here and support the families they left behind, but it also takes pressure off the Mexican establishment. From the point of view of the Mexican authorities, the poor and unemployed are better off working in the US than staying home causing trouble. The prospect of violence and insurrection is a real one. A porous border protects Mexico from some of the effects of its statist policies. The remittances from abroad, even with the US in recession, are still second only to oil as a legal source of foreign income.

The US has an official policy of excluding illegal immigrants from Mexico, a business policy of employing them cheaply, and a political policy of appealing to whatever side of the question brings in votes and money. What we have not done is address the Mexican government’s policies. The current Mexican policy is to encourage illegal emigration to the US in sufficient numbers to compensate for the lack of economic opportunity within Mexico’s borders. Mexico makes little or no effort to restrict the northward flow, and has no incentive to do so.

Leaving Mexico out of this discussion makes it completely useless to deal with the subject at all. Any immigration reform in the US that is not acceptable to Mexico will be subverted.

Physical barriers can make it more difficult to cross into the US, but no barrier is impenetrable. Past efforts have affected the immigration flow only marginally. Now people cross the desert in Arizona instead of California. It is more dangerous and expensive now, which makes the smuggling gangs more important and prosperous. Short of erecting a Soviet-style border defense, with barbed wire, minefields, and machine gun posts, this is an approach that has not worked and will not work.

The single largest factor that reduced illegal immigration from Mexico was the US recession. We should take a hint from that. Think of the border as a semi-permeable membrane. If the border is impermeable to investment, but permeable to people, people will flow across toward where there is investment (and jobs) until an equilibrium point is reached. To reduce this osmotic pressure, and reach an equilibrium point involving less movement across the border, it is necessary to increase investment in Mexico.

Under the Mexican constitution (Article 27), all mineral rights belong to the government. Oil is extracted and processed by a state monopoly, Pemex. With the state desperate for money, Pemex has deferred maintenance and exploration, and is considered to be in a run-off mode as existing petroleum reserves are used up and newer extraction techniques are ignored. Nevertheless, Mexico has for many years issued licenses to foreign mining companies, and is the world’s second largest producer of silver. Under the same article, foreigners cannot own land within 100 km of a border or 50 km of the sea. Various restrictions also apply to foreign ownership in communications, transportation, and financial services.

The Mexican state uses its power over the economy to reward political allies, punish enemies, and extract benefits for the politicians themselves. Nothing about this should seem unfamiliar to residents of any large American city, but the scope given by Mexican law for self-serving politicians is something even big city mayors could only dream of.

We are going to have to accommodate a certain large number of Mexicans coming to the US. The circumstances of their coming and remaining should be debated, but so should the conditions that drive them. We should not let it happen without getting economic concessions from Mexico.

Update: Fausta has much more about the Mexican government’s cynical policy on immigration.

A previous ep from 2006 supposedly depicted Mohammad, until the network excised all images of that particular worthy. They even went so far as to bleep out every utterance of his name. All done in the fear that, unless appeased, intolerant practitioners of the Religion of Peace would indulge in an orgy of bloodshed and fire.

I wrote Comedy Central at the time, taking them to task for their shameless act of cowardice. I received a well spoken, thoughtfully composed reply that explained the concerns of the network.Read the rest of this entry »

In the past I, like many general investors, shied away from the concept of market timing. It was viewed as too difficult, and many investors left the markets when stocks went down and then missed the rally on the way up, essentially “buying high and selling low”. Instead, investors were advised to “stay the course” and keep investing, assuming that, over time, the rising markets would reward continuous faith with high returns.

An article in Sunday’s Chicago Tribune showed in a crystal clear fashion that, in fact, market timing is the ONLY issue for stocks, at least nowadays. This article shows stock performance for the top 50 stocks by market capitalization based in the Chicago region.

EVERY SINGLE STOCK is showing positive performance over the last 12 months! What are the odds of that, assuming that the stock market has its ebbs and flows? Very remote. The ONLY issue in the market over the last few years has been timing; everyone lost in late 2008 when the market cratered, and everyone who bought in at the trough made a lot of money. Likely to see this same article in late 2008 virtually 100% of the top 50 firms would be in negative territory over the prior year.

While I can’t say for certain what is driving stock performance UP (now) or DOWN (2008), I can say that virtually the entire market is extremely correlated with this phenomenon, as indicated by the top 50 stocks all being in positive territory.

Recent articles I have seen point to returns as being closely tied to the P/E level; when you buy into a “cheap” P/E market, you do well; when you buy into an “expensive” P/E market, you do poorly. While no one can say for certain what cheap or expensive really means, that broad theory is one that might be crucial to stock investing post 2000. In modern history (the last 30 years) there hasn’t been a long period where stocks traded in such a narrow range (around the Dow 10,000 level); but we need to decide how to weight the last few decades against the entire history of the stock market.

While I am not a professional stock adviser, the fact that 50 out of 50 of the top Chicago stocks (by market capitalization) are all up has to be a signal of some sort.

When I first started getting into the utility business I remember that I was on an airplane traveling to a client in another city when I started talking with a woman yesterday who had a young son. She asked what I did for a living and I said that I worked with utilities. Her son piped up “Are you the man who turns off the power?” and that killed the conversation (mom was embarrassed and I learned to be careful about too much information).

One of the different elements about utilities is that they serve all customers. Since utilities are a “natural monopoly” (meaning that it doesn’t make sense to have two companies stringing up electric poles side by side) the flip side of giving them monopoly rights is that they must provide for all the customers in their “service territory”. While most of the readers of this blog probably never interact with the utility company unless they move or have an outage, utilities spend a significant amount of time and money on collections and turn-on, turn-off activities for poorer customers. Each of these events is preceded by multiple calls, collection attempts, and then physical visits, none of which make money for the utility.

While a lot of this made sense when utilities were regulated monopolies, now many regions have significantly “de-regulated”, which mainly means that the generators of power are free to charge what they want and the local utility makes its money by passing on power costs and charging more for their profits. In the case of Illinois, where Exelon provides (most of) the power and then their fully-owned subsidiary Commonwealth Edison provides power to residents (and complains about the high cost of power that it passes on), no one is shedding tears for Exelon. However, in other areas where the generation and distribution companies are actually separate, you need to start thinking harder about the cost of poorer residents in your service territory.

This article describes the (sad) case of a disabled resident in Bronzeville (a less affluent area in Chicago) who is complaining to the Chicago Tribune that the local gas utility won’t turn on the fuel in an article titled “Gas Shut-off Leaves Disabled Man in the Cold“. In the article, the man hasn’t paid his bill, so the utility comes and turns off his service in April, and the man is angry and complains to the newspaper.Read the rest of this entry »

Every leftist today seems to honestly believe that they seek an equitable society in which all people of all persuasions live together in peace. When asked, they will proudly point out all the rhetoric they spout about inclusion and harmony. They will say that proves they bring people together.

In reality, the implicit assumptions behind leftists’ rhetoric foster suspicion, paranoia and outright hatred between Americans. Every time they open their mouths or touch a keyboard, leftists sow discord and hostility in American society and divide neighbor from neighbor.

Leftists induce everyone to see themselves as personally continually under threat from their fellow citizens. They induce everyone to believe that everyone else in society will cheat them or otherwise treat them unfairly. They induce everyone to think of themselves as individuals and groups constantly under siege and attack by virtually everyone else in America.

For an example of this one need look no further than the President’s own rhetoric. Every time he speaks about almost any issue, he pushes the implicit view that one group of Americans is cheating or attacking another group and that only people like himself can save them.

“This year, the stakes are higher than ever,” he said, according to a transcript of his remarks provided by Democratic officials. “It will be up to each of you to make sure that young people, African Americans, Latinos and women who powered our victory in 2008 stand together once again.

Obama is saying that the listed groups depend on Obama to get a fair deal in America. The “stakes” that are higher is the protection of the state against the dishonest and threatening actions of other Americans.

But clearly, the elites must be purged from all institutions and life. The attitudes of Obama or Goldman Sachs (screw the customer, because you are powerful) even when shown to be long-term bad, continue in the attitudes described by Michael Lewis in Liar’s Poker.

How can the elites be purged?

Fear and terror. Not by anything violent and illegal, not only is that course counter productive but middle class people are neither violent nor criminal — it is why they are middle class in the first place.

The elites have a great weakness. A hideous one. They and particularly the media cover for each other so much that all their dirty secrets are not even hidden. They are out in the open for anyone to see. John Edwards, Eliot Spitzer, Blago, Mayor Tony Villaraigosa, Gavin Newsome, John Ensign, Dennis Hastert, Chris Dodd, Barney Frank, and the rest all had their scandals widely known. EVERYONE in the elite knew about them, and never uttered them publicly. The people involved did not try to hide it.

What we need is an army of Luke Fords. Bloggers, who have some traffic, no ambition for politics, who don’t mind personal attacks, publishing the ugly, sordid, nasty, and often illegal details of the lives of political, cultural, economic, and bureaucratic elite. Plus their friends, families, and supporters. Simply being around, soaking up the open secrets, and publishing their ugly details, would be enough to push a purging frenzy. Particularly if one could jigger the job as being motivated by insider enemies. For example, unflattering and true details about Rahm Emmanuel being ascribed to people around Bill Clinton. To use a hypothetical. Elite infighting is another weakness.

The strength of the people is that they don’t make good Alinsky targets. Joe the Plumber is just a guy. So too, Luke Ford, or Mickey Kaus, or anyone else. It is the logical culmination of asymmetric political warfare.

Joe Kernan asked John Harwood how many times Harwood had interviewed President Obama — three? four?

I don’t remember Harwood’s exact response but he beamed. He was obviously proud.

Maybe he wasn’t considering how he came across to viewers. Or maybe: a) he doesn’t care, b) he cares mostly about beating out competing journalists or c) he cares mostly about the opinions of people who share his opinions. I mean, given how Obama’s people treat the media, and especially given how they treat people who disagree with them, what does it say about a journalist that he is invited to interview the President three or four times?

Note particularly chart #27. The amount of time spent reading books has actually increased since 1999…newspapers and magazines, not so much. Total time spent on all print media combined, though, doesn’t come anywhere close to the time spent watching TV.

Execs in the periodicals industry are desperately hoping that iPad and similar devices will save them. I think that many if not most of them are going to be disappointed in this hope.

Captain Frederick Augustus Burnaby of the Royal Horse Guards was no ordinary officer. For a start he was a man of prodigious strength and stature. Standing six-foot-four in his stockinged feet, weighing fifteen stone, and possessing a 47 inch chest, he was reputed to be the strongest man in the British Army. Indeed, it was even said that he could carry a small pony under his arm. … Nor was this son of a country parson entirely brawn. He also displayed a remarkable gift for languages, being fluent in at least seven, including Russian, Turkish and Arabic. Finally, he was born with an insatiable appetite for adventure which he combined with a vigorous and colourful prose style. Inevitably, these two latter qualities brought him into contact with Fleet Street, with the result that during his generous annual leaves he served abroad on several occasions as a special correspondent of The Times and other journals … .

I am halfway through “A Ride to Khiva” and I am very grateful to Google Books, which provides full text, out-of-copyright books, at this point everything published before 1922. Through this wonderful service, I have been easily able to make the acquaintance of this extraordinary officer in his own prose, via Kindle.

One quote from the book. Burnaby is in St. Petersburg, and he sends a written request to the Russian Minister of War, Gen. Miliutin, asking his leave to travel across Russia and on to Khiva, which is (at that point) still beyond the Russian frontier. Miliutin responds in the negative, and offering as his explanation that he cannot answer for the security of travelers beyond the Tsar’s domains.

I should have much liked to have asked Gen. Miliutin one question, and to have heard his answer — not given solemnly as the Russian Chancellor makes his promises, but face to face, as a soldier — would he, when a captain, have turned his face homeward to St. Petersburg simply because he was told by a foreign government that it could not be responsible for his safety? I do not think so; and I have a far higher opinion of the Russian officers than to imagine that they would be deterred by such an argument if used to them under circumstances similar to those in which I found myself.

Person-to-person communications media…letters, telegrams, telephone calls…have long played a role in popular music. Just for some weekend fun, here are some songs, ranging from the light-hearted to the very sad, in which various forms of communication make an appearance.

General Motors CEO Ed Whitacre made a big deal this week about GM’s repayment of the $6.7 billion in loans that the company got last year from the U.S. and Canadian governments. (GM press release here.) However, as this article points out, GM still has the $52 billion it got that was classified as equity rather than as debt. That money won’t be repaid unless and until GM does an Initial Public Offering which is large and successful enough to sell the government-owned positions at a price high enough to net $52 billion for the 73% of the stock owned by these two governments. For comparison, the total market capitalization of the Ford Motor Company is $48 billion.

The reason to do this is the dingbats of ‘the religion of peace’ have taken a sensible measure against idolatry in the form of worshiping Mohammed and twisted it into a measure that threatens violence if anybody makes any depiction of Mohammed, no matter how removed from reality. This has come up practically in South Park (yes, that South Park) as Comedy Central has recently censored a bear suit Mohammed as well as an episode finish speech on the value of not giving in to intimidation that does not mention Mohammed at all.

I look forward to all the art classes in our area participating in this important exercise in free speech… oh who am I kidding. Those of you with the guts to do this, I look forward to seeing your efforts.

Sometime back I wrote about “Delocalization”, i.e., how the internet makes distant events feel local and makes local events feel distant.

At the time I overlooked another attribute of delocalization: It allows distant evils like slavery and the general violation of human and civil rights to move into America and set up shop right on Mainstreet USA.

…There is also the problem of the elite’s lack of humility. I’m a pretty smart guy, and I think I could do a decent job of re-ordering the world if given absolute power.

But … It wouldn’t be right. It is not up to me to tell my fellow humans how to live. I think bowling, for instance, is stupid, though many people enjoy it. What/who gives me the right to tell bowlers that they should be going to the symphony instead?

But nobody is forcing me to go bowling and nobody is using my tax dollars to subsidize bowling, so I don’t care. Not my business, and not a problem. This is the essence of liberty.

For a thought experiment, substitute guns, french fries, or abortion for bowling above and see how you feel. The realization that you do not have the Moral Authority to try to construct a perfect world that eliminates what you dislike is the essence of humility. Many very bright people lack humility.

Posted by Michael Kennedy on 21st April 2010 (All posts by Michael Kennedy)

In my years in medicine, which began in 1961 or even earlier with premed, I met a few very colorful teachers. From time to time, I would like to profile some of them lest they be forgotten as people and remain only an entry in a dusty bound volume in a library. One such was a neurosurgeon named Aidan Raney. When I began to do a little research on him, I found that Google searches turn up only his son, a very good cardiac surgeon in Newport Beach. I remember the son as a high school student I met once.

When I was a third year medical student, my medical school had a program in which students could spend a summer with private practice physicians to see what the life was like. I spent a summer with Aidan Raney. I wasn’t so much interested in neurosurgery but wanted to see more of it before I committed myself to a career. Doctor Raney had been the first neurosurgery resident at the new Los Angeles County Hospital after it opened in 1933. The old hospital, now torn down, had been in service since about 1913. The University of Southern California medical school, which had closed in 1920 as a consequence of the Flexner Report, reopened when the new hospital opened and graduated its first class in 1932.

The last hundred years or so have seen the introduction first of silent movies, then of sound movies, followed by television and color television. Moving images have great emotional and iconic power, and these technologies have had great cultural and economic impact.

We’re now seeing Internet-based video moving into the mainsteam. Netflix, for example, offers portions of their library for instant viewing, either on a PC or on a TV set (with adapter offered by several manufacturers.) Ventures, such as Snag Films (Ted Leonsis, Steve Case, and friends), have arisen to focus on Internet distribution of particular forms of content. (Documentaries, in Snag’s case.) Other ventures are focusing on enablement of Internet video for mobile devices. Improvement in wireline and wireless bandwiths makes it all feasible and affordable, and devices such as the iPad will make it increasingly convenient.

I’d like to discuss the emergence of Internet video from the standpoints of: Its impact on the structure of various industries, the investment opportunities and risks that it may create, and most of all its potential effects on culture and on the political environment. For starters, a few hypotheses:Read the rest of this entry »